US producers have been lowering caustic soda prices due to an oversupply situation. In April 1999, spot prices declined further, by $10 per tonne, to $75-85 per dst (dry short tonne, equals 0.9 metric tonne).

The prices of chlorine in the spot market increased by $20 per tonne, to $60-80 per tonne in April 1999. The earlier announced price increase of $30 per tonne for contract prices for the second quarter of 1999 is yet to be implemented.

In the US, ECU realisations are not expected to improve in the next quarter.Landed cost of caustic soda lye imports in India remained at Rs 15,348 per tonne in March 1999.

In the first week of May 1999, delivered price of caustic soda lye(ex-factory price plus excise duty, sales tax and freight) increased in the northern, western and eastern regions, as compared with those in the first week of April 1999. However, prices declined in the southern region.

In the west, prices increased by Rs 1,500 per tonne to Rs 12,500 per tonne. In the north, prices increased by Rs 1,000 per tonne to Rs 12,500 per tonne.

In the east, prices increased by Rs 500 per tonne to Rs 13,500 per tonne. In the south, prices declined by Rs 250 per tonne to Rs 12,000 per tonne. Prices declined due to plant closures of key end users, such as Grasim and SIV Ltd.

In the first week of May 1999, prices of caustic soda flakes increased by Rs 50-80 per bag in various regions, as compared with those in the first week of April 1999. Prices in the west and north were Rs 690 per bag and Rs 700 per bag (of 50 kg), as compared with Rs 610 per bag and Rs 620 per bag respectively, during the same period.

The increase in the prices is attributed to supply constraints in themarket. According to sources, many producers lowered production, while some producers were not operating due to technical problems.

Producers are attempting to increase exports in order to reduce the pressure on domestic prices. Some producers were partially successful in exporting flakes, thereby reducing the supply pressure in the domestic market.

Export price (fob India) of flakes declined to around $200 per tonne in early May 1999, as compared with $220 per tonne in April 1999.

In the west, ex-factory prices of chlorine declined by Rs 635 per tonne, to Rs 2,540 per tonne, in the first week of May 1999, as compared with those in the first week of April 1999. In the south, prices were stable, at Rs 2,143 per tonne, in the first week of May 1999.

ECU realisations (ex-factory) of producers in the west increased by Rs 625 per tonne, to around Rs 12,180 per tonne in May 1999, due to an increase in the prices of caustic soda.

In the coming months, prices of caustic soda and chlorine are likely toremain stable as producers are attempting to rationalise the supply in the market.

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